The difference between reading and studying is like
the difference between drifting in a boat and rowing toward a destination.Oscar Feucht as forwarded by my
minister, Ned Wilson
Jensen Comment
I might point out that rowing requires a lot more sweat.

Having already downed a few power drinks, she turns
around, faces him, looks him straight in the eye and says, "Listen here good
looking, I screw anybody, anytime, anywhere, your place, my place, in the car,
front door, back door, on the ground, standing up, sitting down, naked or with
clothes on… it doesn't matter to me. I just love it."

Eyes now wide with interest, he responds, "No
kidding. I'm in Congress too. What state do you represent?"Forwarded by Dr. Wolff

I haven't left my house in days. I watch the news channels incessantly. All the
news stories are about the election; all the commercials are for Viagra and
Cialis. Election, erection, election, erection -- either way we're getting
screwed!
Bette Midler

Whether or not you love or hate the
scholarship and media presentations of the University of Chicago's Milton
Friedman, I think you have to appreciate his articulate response on this
historic Phil Donohue Show episode. Many of the current dire warnings about
entitlements were predicted by him as one of the cornerstones in his 1970's PBS
Series on "Free to Choose." We just didn't listen as we poured on unbooked
national debt ($60 trillion and not counting) for future generations to deal
with rather than pay as we went so to speak! . And yes Paul and Zafer, I know
there may be better alternatives than capitalism as a basis for optimization of
economies in theory. But all economic systems must deal with inherent greed in
practice.
The Grand Old Scholar/Researcher on the subject of greed in economics
Video: Milton Friedman answers Phil Donohue's questions about
capitalism.---
http://www.cs.trinity.edu/~rjensen/temp/MiltonFriedmanGreed.wmv

Landesman wasn't being asked specifically about
negative feelings over the Loveland Museum Gallery in Loveland, Colo., a
taxpayer-funded art space that recently featured a controversial painting with
Jesus Christ receiving oral sex from a man. He's certainly not used to critical
questions about just how this blasphemy-by-numbers seems like a tiresome rerun
-- Jesus in urine, Jesus in chocolate, Jesus in (homo)sexual ecstasy. Brent Boswell, Shock and Awful Art, Townhall, October 22, 2010 ---
http://townhall.com/columnists/BrentBozell/2010/10/22/shock_and_awful_art
Rocco Landesman is the chairman of the National Endowment for the Arts
Landesman does not have the guts to display a similar offensive picture
of Allah

In the U.K. everything is permitted unless it’s
prohibited. In Germany, it’s the other way around; everything is prohibited
unless it’s permitted. In Netherlands, everything’s prohibited even if it is
permitted. And in France, of course, everything is permitted especially if it’s
prohibited.Sir David Tweedie, Former Director
of the International Accounting Standards Board

The unemployed,
unlike the rich whom this president has just bowed to, are, in fact, the job
creators.Keith Olbermann on
MSNBC
Jensen Question
Does this mean that we can create 100 million new jobs by laying off 10 million
people? Say what Keith?

At her final press conference as House Speaker,
Nancy Pelosi (D-CA) said, "Deficit reduction has been a high priority for us. It
is our mantra, pay-as-you-go." The numbers tell a different story. When the
Pelosi Democrats took control of Congress on January 4, 2007, the national debt
stood at $8,670,596,242,973.04. The last day of the 111th Congress and Pelosi's
Speakership on December 22, 2010 the national debt was $13,858,529,371,601.09 -
a roughly $5.2 trillion increase in just four years. Furthermore, the year over
year federal deficit has roughly quadrupled during Pelosi's four years as
speaker, from $342 billion in fiscal year 2007 to an estimated $1.6 trillion at
the end of fiscal year 2010.Fox Nation, "Speaker Pelosi Leaves With a Whopper,"
January 4, 2011 ---
http://nation.foxnews.com/nancy-pelosi/2011/01/04/speaker-pelosi-leaves-whopper

If you're Keith Olbermann, you spend the day
insulting people and attacking Fox News on twitter with childish, profane
messages.

Jonathon M. Seidl reports at The Blaze the
outspoken, always-angry host spent Wednesday evening attacking Fox News and
Bill O'Reilly when someone criticised him over his support for the far-left
wing blog Daily Kos.

He started his twitter war with a message saying
"Fox News is 100% bulls*" (expletive edited).

Olbermann - a man who fancies himself a modern day
Edward R. Murrow - then sent a message involving manure and ended his tirade
with a message attacking not only Fox News and Bill O'Reilly (a frequent
target for Olbermann), but those who watch Fox News.

"I did it because his network is full of bulls* &
O'Reilly is full of bulls*. & if you believe them you're full of bulls*", he
tweeted. (Expletives edited)

Later, the Countdown host got into another vulgar
exchange with a different twitter user over Rush Limbaugh.

Olbermann is well known for his angry commentary
and air of self-importance. People he disagrees with are targeted on a
segment where he picks the "Worst People in the World".

In another segment, he used the Nazi salute in an
on-air attack of Bill O'Reilly, and he compared President Obama's tax rate
compromise to appeasing Nazis.

One does not need a degree in psychology to see
Olbermann has a serious problem. Either that, or he is the single most
hate-filled liberal on the MSNBC lineup.

And that's saying something.

If MSNBC wants to be seen as anything other than
the network of insane liberal hatred, it will need to put a stop to such
behavior by its' hosts, even if it means firing them.

Jensen Comment
For even more laughs watch MSNBC's fiery and highly profane Ed Shultz lambast
Fox Network for its political bias. The best weapons in the GOP arsenal are the
filthy-mouthed and always-angry MSNBC progressives. Karl Rove actually wishes
they could improve their dismal viewer ratings, especially among profanity-weary
independents.

Does anyone
remember what happened on Christmas Eve last year? In one of the most
expensive Christmas presents ever, the government
removedthe $400 billion limit on their Fannie and
Freddie guaranty. This act increased taxpayer liabilities by
six trillion dollars; however, the news was lost
in the holiday cheer. This is one instance in a broader campaign to
manipulate the public perception, gradually depriving us of independent
thought.

Consider another example: what news story broke on April 16, 2010? Most of
us would say the SEC's
lawsuitagainst Goldman Sachs. Goldman is the
market leader in "ripping the client's face off," in this instance creating
a worst-of-the-worst pool of securities so Paulson & Co could bet against
it. Many applauded the SEC for this action. Never mind that singling out
one vice president (the "Fabulous Fab") and one instance of fraud is like
charging Al Capone with tax evasion. The dog was wagged.

Very
few caught the real news that day, namely the damning
complicityof the SEC in the Stanford Ponzi
scheme. Clearly, Stanford was the bigger story, costing thousands of
investors
billionsof dollars while Goldman later settled
for half a
billion. Worse, the SEC knew about Stanford since
1997, but instead of shutting it down, people left the SEC to workfor Stanford. This story should have caused
widespread outrage and reform of the SEC; instead it was buried in the back
pages and lost to the public eye.

Lest we
think the timing of these was mere coincidence, the Goldman lawsuit was
settled on July 15, 2010, the same day the financial reform package
passed. The government threw Goldman to the
wolves in order to hide its own shame. When the government had its desired
financial reforms, it let Goldman settle. These examples demonstrate a
clear pattern of manipulation. Unfortunately, our propaganda problem runs
far deeper than lawsuits and Ponzi schemes.

Here is a
more important question: which companies own half of all
subprimeand
Alt-A(liar loan) bonds? Paul Krugman writes that
these companies were "mainly out of the picture during the housing bubble's
most feverish period, from 2004 to 2006. As a result, the agencies played
only a minor role in the epidemic of bad lending."[iii] This phrase is
stupefying. How can a pair of companies comprise half of a market and yet
have no major influence in it? Subprime formed the core of the financial
crisis, and Fannie and Freddie (the "agencies") formed the core of the
subprime market. They were not "out of the picture" during the subprime
explosion, they were the picture. The fact that a respectable Nobel
prize-winner flatly denies this is extremely disturbing.

Amazingly, any attempt to hold the government accountable for its role in
the subprime meltdown is dismissed as right-wing
propaganda. This dismissal is left-wing
propaganda. It was the government that initiated securitization as a tool
to dispose of
RTCassets. Bill Clinton ducks all
responsibility, ignoring how his administration imposed arbitrary
quotason any banks looking to merge as Attorney
General Janet Reno "threatened legal action against lenders whose racial
statistics raised her suspicions."[iv] Greenspan fueled the rise of
subprime derivatives by lowering rates,[v] lowering reserves,[vi] and
beating down reasonable
opposition. And at the center of it all were
Fannie and Freddie
bribing officials, committing fraud,
dominating private-sector
competition, and expanding to a
six-trillion-dollar debacle. The fact that these facts are dismissed as
propaganda shows just how divorced from reality our ‘news' has become. Yes,
half of all economists are employed by the
government, but this is no reason to flout one's
professional responsibility. As a nation we need to consider all the facts,
not just those that are politically expedient.

When federal finances are discussed, it is almost
always in terms of the difference between expenditures and revenues.
Usually, the former exceed the latter and we have a deficit. The cumulative
total of deficits less the occasional surpluses is what we call the national
debt. When we analyze the debt in terms of its burden, it is usually by
looking at it in terms of the gross domestic product. Presently, debt held
by the public, the most common measure of federal debt, is $9.3 trillion, or
about 60 percent of GDP.

If the federal government was a corporation and one
was contemplating buying shares of its stock, however, one would certainly
want to know much more about its finances. One would want to know about the
government’s assets as well as its liabilities. And one would want to know
whether there are any liabilities other than those included in the figures
for debt held by the public, among other things.

These data are not easy to come by. For many years
they appeared only in an obscure mimeographed document called the Statement
of Liabilities and Other Financial Commitments of the United States that the
Treasury Department produced only because it was required by a 1966 law to
do so. The reason is that the financial statement showed vast government
liabilities not included in the usual figures for the national debt. Since
1998, these data have been published in a document called the
Financial
Report of the U.S. Government. The fiscal year 2010 edition was released
on Dec. 21.

The most important difference between the Financial
Report and the federal budget is that the former calculates costs on an
accrual basis, whereas the latter only measures cash flow. Thus if the
federal government incurred a debt that would not be paid until some time in
the future, that cost would not be part of the conventionally measured
national debt. It would only add to the debt when cash had to be expended to
cover the expense that had been incurred. It’s worth remembering that
private corporations are required to use accrual accounting and corporate
executives would be jailed for using the sort of accounting that the federal
government routinely uses.

The difference in accounting methods is most easily
grasped in terms of Social Security. It has a liability over the next 75
years of $8 trillion more than the projected revenue from payroll taxes and
interest on the Social Security trust fund. In every meaningful sense of the
term, this is part of the national debt, but is excluded from the official
debt figures.

Another consequence of ignoring future liabilities
in calculating the national debt is that programmatic changes that save
money in the future are similarly ignored. Thus, according to the Financial
Report, Medicare had estimated liabilities in excess of future revenues over
the next 75 years of $38 trillion at the end of fiscal year 2009. However,
in the meantime, Congress enacted the Affordable Care Act, which contains
significant cost controls on future Medicare spending. As a consequence,
Medicare’s long-term liabilities fell by $15 trillion in 2010.

Despite high demand for electricity as people
shivered at home over Christmas, most of the 3,000 wind turbines around
Britain stood still due to a lack of wind.

Even yesterday , when conditions were slightly
breezier, wind farms generated just 1.8 per cent of the nation’s electricity
— less than a third of usual levels.

The failure of wind farms to function at full tilt
during December forced energy suppliers to rely on coal-fired power stations
to keep the lights on — meaning more greenhouse gases were produced.

Experts feared that as the Government moved towards
a target of generating 30 per cent of electricity from wind — while closing
gas and coal-fired power stations — cold, still winters could cause a
problem in the future.

Prof Michael Laughton, emeritus professor of
engineering at Queen Mary University London, said wind turbines became still
just when they were needed most, meaning that the country was reliant on
imported oil or coal.

Wind farms becalmed just when needed the most Wind
farms in Britain generated practically no electricity during the recent cold
spell, raising fresh concerns about whether they could be relied upon to
meet the country’s energy needs.

Cross-country skiers at the wind farm at Whitelee
near Glasgow, which is Europe's largest, but conditions in the cold spell
left turbines still Photo: CHRIS JAMESBy Louise Gray, Environment
Correspondent 8:00AM GMT 01 Jan 2011 33 Comments Despite high demand for
electricity as people shivered at home over Christmas, most of the 3,000
wind turbines around Britain stood still due to a lack of wind.

Even yesterday , when conditions were slightly
breezier, wind farms generated just 1.8 per cent of the nation’s electricity
— less than a third of usual levels.

The failure of wind farms to function at full tilt
during December forced energy suppliers to rely on coal-fired power stations
to keep the lights on — meaning more greenhouse gases were produced.

Experts feared that as the Government moved towards
a target of generating 30 per cent of electricity from wind — while closing
gas and coal-fired power stations — cold, still winters could cause a
problem in the future.

Prof Michael Laughton, emeritus professor of
engineering at Queen Mary University London, said wind turbines became still
just when they were needed most, meaning that the country was reliant on
imported oil or coal.

Fears over record gas bills in cold weather01 Jan
2011 Derek Pringle: a captain's wicket is loaded with symbolism and England
have Ricky Ponting's number01 Jan 2011 'Bonkers' green energy risks power
shortages01 Jan 2011 The cost to every household of subsidising energy
generation by wind farms01 Jan 2011 The Ashes: Australian cricket is no
longer a game for hard men from the outback01 Jan 2011 2010: The Year in
Review01 Jan 2011 The wind turbines may even use up electricity during a
calm period, as they were rotated in order to keep the mechanical parts
working. There are more than 3,000 turbines in Britain and the Department of
Energy and Climate Change planned to have up to 6,000 onshore and 4,000 at
sea by 2020.

Charles Anglin, of Renewable UK, which represented
the wind energy industry, said that over a normal year wind turbines were
working about a third of the time. He said future energy plans took into
account periods when wind turbines were still, just as current models had
backup available for when nuclear or coal plants were down.

“There are periods, of course, when it is not windy
but year on year we are seeing growth,” he said.

Britain had 2 per cent of electricity from
renewables in 2002, but that figure was now almost 10 per cent, with wind
providing about half.

In August of this year, Admiral Michael Mullens,
Chairman of the Joint Chiefs of Staff, advised Congress that “The National
debt is the biggest threat to our national security.” In November, voter
sentiment against the debt and deficit led to an historic rebuke of
Congressional incumbents. In December, the President’s Debt Commission laid
out in stark terms the imminent economic impact of continued deficit
spending.

Apparently rejecting these clarion calls, the
President and Congress acted in the lame-duck session to cut not one dime of
federal spending, while increasing the national debt by nearly $1 trillion.
They are ignoring a glaring problem that, if not addressed soon, will cause
a panoply of other problems.

Some insist that the problem with increasing the
debt by nearly $1 trillion is that the borrowed money will be loaned to us
by China. Concerning as it is that we have become the world’s largest debtor
to a foreign sovereign whose interests are (to put it mildly) not always in
harmony with our own, that's not the biggest problem. What ought to be of
even greater, more immediate concern is the fact that China will refuse to
loan us the money.

From October 2009 to October 2010, we financed $734
billion of our $1.690 trillion deficit through loans from foreign entities.
And while China remains our largest creditor, China actually reduced the
amount of U.S. debt it holds by $32 billion over the last year—from $938
billion to $906 billion. Through its actions, China has indicated that it
will no longer fund the U.S. government's practice of perpetual deficit
spending.

So if not China, then who? That's the problem.

The largest increase in U.S. debt holdings over the
past year was a near five-fold increase by the U.K.—from $108 billion to
$477 billion — and a near three-fold increase by Canada — from $44 billion
to $125 billion.

The reality is that the U.K. and Canada do not have
another half-trillion dollars to loan the U.S. in 2011. According to the
World Bank, the entire economic output of the U.K. and Canada combined is
only about $3.5 trillion annually.

So if China won't and the U.K. and Canada can't,
who is going to loan us a trillion dollars in the next 12 months? Nobody
knows.

The economic threat from China and other foreign
countries loaning us trillions of dollars is like falling off the Empire
State Building. It isn't the fall itself that kills you ... it's the sudden
stop.

Commonwealth investors increased their U.S.
holdings last year as they fled debt holdings in the Eurozone, nearly
collapsing several E.U. government-bond markets derisively referred to as
the PIIGS—Portugal, Italy, Ireland, Greece and Spain.

Continued in article

Jensen Comment
We're worrying about a paper tiger here. Zimbabwe has shown us the light. We
simply print trillions of dollars to make up for the deficits. Ben Bernanke
listed when he took a continuing education course from Robert Mugabe.

Questions
Although all 50 states are in deep financial troubles, what state is in the
worst shape at the moment and is unable to pay its bills?
Hint: The state in deepest trouble is not California, although California is in
dire straights!

How did accountants hide the pending
disasters?

Watch the Video
This module on 60 Minutes on December 19 was one of the most worrisome episodes
I've ever watched
It appears that a huge number of cities and towns and some states will default
on bonds within12 months from now
"State Budgets: The Day of Reckoning Steve Kroft Reports On The Growing
Financial Woes States Are Facing," CBS Sixty Minutes, December 19, 2010 ---
http://www.cbsnews.com/stories/2010/12/19/60minutes/main7166220.shtml

The problem with that, according to Wall Street
analyst Meredith Whitney, is that no one really knows how deep the holes
are. She and her staff spent two years and thousands of man hours trying to
analyze the financial condition of the 15 largest states. She wanted to find
out if they would be able to pay back the money they've borrowed and what
kind of risk they pose to the $3 trillion municipal bond market, where state
and local governments go to finance their schools, highways, and other
projects.

"How accurate is the financial information that's
public on the states? And municipalities," Kroft asked.

"The lack of transparency with the state disclosure
is the worst I have ever seen," Whitney said. "Ultimately we have to use
what's publicly available data and a lot of it is as old as June 2008. So
that's before the financial collapse in the fall of 2008."

Whitney believes the states will find a way to
honor their debts, but she's afraid some local governments which depend on
their state for a third of their revenues will get squeezed as the states
are forced to tighten their belts. She's convinced that some cities and
counties will be unable to meet their obligations to municipal bond holders
who financed their debt. Earlier this year, the state of Pennsylvania had to
rescue the city of Harrisburg, its capital, from defaulting on hundreds of
millions of dollars in debt for an incinerator project.

"There's not a doubt in my mind that you will see a
spate of municipal bond defaults," Whitney predicted.

Asked how many is a "spate," Whitney said, "You
could see 50 sizeable defaults. Fifty to 100 sizeable defaults. More. This
will amount to hundreds of billions of dollars' worth of defaults."

Municipal bonds have long been considered to be
among the safest investments, bought by small investors saving for
retirement, and held in huge numbers by big banks. Even a few defaults could
affect the entire market. Right now the big bond rating agencies like
Standard & Poor's and Moody's, who got everything wrong in the housing
collapse, say there's no cause for concern, but Meredith Whitney doesn't
believe it.

"When individual investors look to people that are
supposed to know better, they're patted on the head and told, 'It's not
something you need to worry about.' It'll be something to worry about within
the next 12 months," she said.

No one is talking about it now, but the big test
will come this spring. That's when $160 billion in federal stimulus money,
that has helped states and local governments limp through the great
recession, will run out.

The states are going to need some more cash and
will almost certainly ask for another bailout. Only this time there are no
guarantees that Washington will ride to the rescue.

After 30 months, countless TV appearances, and $80
million spent on an extravagant PR campaign, T. Boone Pickens has finally
admitted the obvious: The wind energy business isn't a very good one.

The Dallas-based entrepreneur, who has relentlessly
promoted his "Pickens Plan" since July 4, 2008, announced earlier this month
that he's abandoning the wind business to focus on natural gas.

Two years ago, natural gas prices were spiking and
Mr. Pickens figured they'd stay high. He placed a $2 billion order for wind
turbines with General Electric. Shortly afterward, he began selling the
Pickens Plan. The United States, he claimed, is "the Saudi Arabia of wind,"
and wind energy is an essential part of the cure for the curse of imported
oil.

Voters and politicians embraced the folksy
billionaire's plan. Last year, Senate Majority Leader Harry Reid said he had
joined "the Pickens church," and Al Gore said he wished that more business
leaders would emulate Mr. Pickens and be willing to "throw themselves into
the fight for the future of our country."

Alas, market forces ruined the Pickens Plan. Mr.
Pickens should have shorted wind. Instead, he went long and now he's stuck
holding a slew of turbines he can't use because low natural gas prices have
made wind energy uneconomic in the U.S., despite federal subsidies that
amount to $6.44 for every 1 million British thermal units (BTUs) produced by
wind turbines. As the former corporate raider explained a few days ago,
growth in the wind energy industry "just isn't gonna happen" if natural gas
prices remain depressed.

In 2008, shortly after he launched his plan, Mr.
Pickens said that for wind energy to be competitive, natural gas prices must
be at least $9 per million BTUs. In March of this year, he was still hawking
wind energy, but he'd lowered his price threshold, saying "The place where
it works best is with natural gas at $7."

That may be true. But on the spot market natural
gas now sells for about $4 per million BTUs. In other words, the free-market
price for natural gas is about two-thirds of the subsidy given to wind. Yet
wind energy still isn't competitive in the open market.

But at the same time that Congress was voting to
continue the wind subsidies, Texas Comptroller Susan Combs reported that
property tax breaks for wind projects in the Lone Star State cost nearly
$1.6 million per job. That green job ripoff is happening in Texas, America's
biggest natural gas producer.

Today's low natural gas prices are a direct result
of the drilling industry's newfound ability to unlock methane from shale
beds. These lower prices are great for consumers but terrible for the wind
business. Through the first three quarters of 2010, only 1,600 megawatts of
new wind capacity were installed in the U.S., a decline of 72% when compared
to the same period in 2009, and the smallest number since 2006. Some wind
industry analysts are predicting that new wind generation installations will
fall again, by as much as 50%, in 2011.

There's more bad news on the horizon for Mr.
Pickens and others who have placed big bets on wind: Low natural gas prices
may persist for years. Last month, the International Energy Agency's chief
economist, Fatih Birol, said that the world is oversupplied with gas and
that "the gas glut will be with us 10 more years." The market for
natural-gas futures is predicting that gas prices will stay below $6 until
2017.

So what is Mr. Pickens planning to do with all the
wind turbines he ordered? He's hoping to foist them on ratepayers in Canada,
because that country has mandates that require consumers to buy more
expensive renewable electricity.

How do you say boonedoggle in French?

Mr. Bryce is a senior fellow at the Manhattan Institute. His latest
book is "Power Hungry: The Myths of 'Green' Energy and the Real Fuels of the
Future" (PublicAffairs, 2010).

Jensen Comment
It has long been my contention since the oil crisis in the 1970s that
alternative sources of energy will most likely never compete with oil and gas
until at least 2030 because the Middle East and other world suppliers of oil
will simply turn up their valves and lower their prices to make oil and gas the
cheapest alternative, especially when our infrastructure of pipelines and fuel
stations are all geared to oil and gas.

But we should still vigorously search for alternative sources of energy.
That's what will make oil and gas prices "relatively" cheap for everybody.
Without these other alternatives, sheiks will simply add more gold plating to
their limousines.

When President Obama announced a two-year stay of
execution for taxpayers on Dec. 7, he made it clear that he intends to spend
those two years campaigning for higher marginal tax rates on dividends,
capital gains and salaries for couples earning more than $250,000. "I don't
see how the Republicans win that argument," said the president.

Despite the deficit commission's call for tax
reform with fewer tax credits and lower marginal tax rates, the left wing of
the Democratic Party remains passionate about making the U.S. tax system
more and more progressive. They claim this is all about payback—that raising
the highest tax rates is the fair thing to do because top income groups
supposedly received huge windfalls from the Bush tax cuts. As the headline
of a Robert Creamer column in the Huffington Post put it: "The Crowd that
Had the Party Should Pick up the Tab."

Arguments for these retaliatory tax penalties
invariably begin with estimates by economists Thomas Piketty of the Paris
School of Economics and Emmanuel Saez of U.C. Berkeley that the wealthiest
1% of U.S. households now take home more than 20% of all household income

This estimate suffers two obvious and fatal flaws.
The first is that the "more than 20%" figure does not refer to "take home"
income at all. It refers to income before taxes (including capital gains) as
a share of income before transfers. Such figures tell us nothing about
whether the top percentile pays too much or too little in income taxes.

In The Journal of Economic Perspectives (Winter
2007), Messrs. Piketty and Saez estimated that "the upper 1% of the income
distribution earned 19.6% of total income before tax [in 2004], and paid 41%
of the individual federal income tax." No other major country is so
dependent on so few taxpayers.

A 2008 study of 24 leading economies by the
Organization of Economic Cooperation and Development (OECD) concludes that,
"Taxation is most progressively distributed in the United States, probably
reflecting the greater role played there by refundable tax credits, such as
the Earned Income Tax Credit and the Child Tax Credit. . . . Taxes tend to
be least progressive in the Nordic countries (notably, Sweden), France and
Switzerland."

The OECD study—titled "Growing Unequal?"—also found
that the ratio of taxes paid to income received by the top 10% was by far
the highest in the U.S., at 1.35, compared to 1.1 for France, 1.07 for
Germany, 1.01 for Japan and 1.0 for Sweden (i.e., the top decile's share of
Swedish taxes is the same as their share of income).

A second fatal flaw is that the large share of
income reported by the upper 1% is largely a consequence of lower tax rates.
In a 2010 paper on top incomes co-authored with Anthony Atkinson of Nuffield
College, Messrs. Piketty and Saez note that "higher top marginal tax rates
can reduce top reported earnings." They say "all studies" agree that higher
"top marginal tax rates do seem to negatively affect top income shares."

What appears to be an increase in top incomes
reported on individual tax returns is often just a predictable taxpayer
reaction to lower tax rates. That should be readily apparent from the nearby
table, which uses data from Messrs. Piketty and Saez to break down the real
incomes of the top 1% by source (excluding interest income and rent).

The first column ("salaries") shows average labor
income among the top 1% reported on W2 forms—from salaries, bonuses and
exercised stock options. A Dec. 13 New York Times article, citing Messrs.
Piketty and Saez, claims, "A big reason for the huge gains at the top is the
outsize pay of executives, bankers and traders." On the contrary, the table
shows that average real pay among the top 1% was no higher at the 2007 peak
than it had been in 1999.

In a January 2008 New York Times article, Austan
Goolsbee (now chairman of the President's Council of Economic Advisers)
claimed that "average real salaries (subtracting inflation) for the top 1%
of earners . . . have been growing rapidly regardless of what happened to
tax rates." On the contrary, the top 1% did report higher salaries after the
mid-2003 reduction in top tax rates, but not by enough to offset losses of
the previous three years. By examining the sources of income Mr. Goolsbee
chose to ignore—dividends, capital gains and business income—a powerful
taxpayer response to changing tax rates becomes quite clear.

I often bash government. I say it can't do anything
better than people in a free market.

But the government is unequalled in producing one
thing: negative unintended consequences. Show me a government activity, and
I will show you bad results that even the program's advocates probably don't
like. Here's one example.

Congressmen say our government should "support and
strengthen family-based agriculture."

Abstractly, supporting family-based agriculture
sounds good. Government policies often harm small farms by favoring
corporate agribusinesses. Government could help family farms by ending the
subsidies that mostly go to the big guys. But that doesn't interest the
politicians. They prefer to do things like creating tax breaks to encourage
livestock breeding.

The tax breaks have led to a boom in alpaca
breeding. Twenty-five years ago, there were 150 alpacas in America. Now,
there are 150,000.

One website even advertises: "Have Uncle Sam Help
You Buy Your Alpacas."

Rose Mogerman raises alpacas in New Jersey, the
most densely populated state. "I fell in love with them," she said.

But she fell in love with the tax break first.

"Yes. I have to be honest," she said. "I might have
had two. I wouldn't have had 100. ... I was looking for a tax shelter."

The Alpaca Breeders Association asked its members,
on a scale of 1 to 10, what motivated them to get into alpaca breeding. More
than half rated "tax benefits" a 10.

Yes, alpacas are cute. They are also valued for the
fiber made from their fleece. But selling the fleece doesn't explain the
growth in alpaca raising. At auctions, prices have gotten absurdly high.
Half-ownership of one male alpaca sold for $750,000.

This is not necessarily a good thing. Economists at
the University of California, Davis warn that the industry is in a
speculative bubble. "Alpacas sold today as breeding stock have values wildly
in excess of even the most optimistic scenarios based upon current fiber
prices and production costs," Tina L. Saitone and Richard J. Sexton write.

"(C)urrent prices are not supportable by economic
fundamentals and, thus, are not sustainable," the UC Davis economists write.
Their paper was originally published in the Review of Agricultural Economics
in 2007 with the great title "Alpaca Lies? Speculative Bubbles in
Agriculture."

In other words, people have over-invested, bid up
input prices, and produced too many animals given expected future demand for
their fleece. As a result, I bet lots of people will lose money. Tax policy
is surely a big reason for the over-investment, and an unintended
consequence will be bankruptcy for some alpaca breeders.

I'm using "bubble" in a nontechnical sense because,
strictly speaking, a bubble is an unsustainable inflation of asset prices
inconsistent with economic reality. However, even a wrongheaded tax
preference is real and sustainable. So if the tax break is the reason for
the alpaca boom, there's really no bubble.

The Alpaca Owners and Breeders Association says the
UC Davis study is "seriously flawed (and) full of misinformation," but
offered no evidence for that bald assertion. The authors stand by their
study, saying that no conflicting studies have been published and that their
research is confirmed by a recent price decline.

Government is good at inflating bubbles. The
housing bubble was fueled by low interest rates, tax breaks, and subsidies.

Last year, I reported how Congress' ridiculous tax
credits stimulated demand for electric golf-carts. Electric vehicles are
touted these days as "green" technology and so were given special tax
treatment. Unfortunately, the plug-in carts are ultimately connected to
coal-fired plants. The National Research Council says electric cars may be
worse for the environment than gas-powered cars. That didn't matter to the
policy-makers.

For those of us who are demographic buffs,
Christmas came four days early when Census Bureau Director Robert Groves
announced yesterday the first results of the 2010 Census and the
reapportionment of House seats (and therefore electoral votes) among the
states. The resident population of the United States, he told us in a
webcast, was 308,745,538. That's an increase of 9.7 percent from the
281,421,906 in the 2000 Census -- the smallest proportional increase than in
any decade other than the Depression 1930s but a pretty robust increase for
an advanced nation. It's hard to get a grasp on such large numbers. So let
me share a few observations on what they mean.

First, the great engine of growth in America is not
the Northeast Megalopolis, which was growing faster than average in the
mid-20th century, or California, which grew lustily in the succeeding
half-century. It is Texas.

Its population grew 21 percent in the last decade,
from nearly 21 million to more than 25 million. That was more rapid growth
than in any states except for four much smaller ones (Nevada, Arizona, Utah
and Idaho).

Texas' diversified economy, business-friendly
regulations and low taxes have attracted not only immigrants but substantial
inflow from the other 49 states. As a result, the 2010 reapportionment gives
Texas four additional House seats. In contrast, California gets no new House
seats, for the first time since it was admitted to the Union in 1850.

There's a similar lesson in the fact that Florida
gains two seats in the reapportionment and New York loses two.

This leads to a second point, which is that growth
tends to be stronger where taxes are lower. Seven of the nine states that do
not levy an income tax grew faster than the national average. The other two,
South Dakota and New Hampshire, had the fastest growth in their regions, the
Midwest and New England.

Altogether, 35 percent of the nation's total
population growth occurred in these nine non-taxing states, which accounted
for just 19 percent of total population at the beginning of the decade.

My third observation is that immigration is slowing
down and may be reversed. Immigration accelerated during the 1990s, and the
2000 Census showed more immigrants than the Census Bureau had estimated.

In contrast, immigration has clearly slowed down
since the housing bubble burst and the construction industry went bust in
2007. And the 2010 Census showed fewer residents in several high-immigration
states than the Census Bureau had estimated were there in 2009.

So the watchdog news outfit called PolitiFact has
decided that its "lie of the year" is the phrase "a government takeover of
health care." Ordinarily, lies need verbs and we'd leave the media criticism
to others, but the White House has decided that PolitiFact's writ should be
heard across the land and those words forever banished to describe ObamaCare.

"We have concluded it is inaccurate to call the
plan a government takeover," the editors of PolitiFact announce
portentously. "'Government takeover' conjures a European approach where the
government owns the hospitals and the doctors are public employees," whereas
ObamaCare "is, at its heart, a system that relies on private companies and
the free market." PolitiFact makes it sound as if ObamaCare were drawn up by
President Friedrich Hayek, with amendments from House Speaker Ayn Rand.

This purported debunking persuaded Stephanie
Cutter, a special assistant to the President. If "opponents of reform
haven't been shy about making claims that are at odds with the facts," she
wrote on the White House blog, "one piece of misinformation always stood
out: the bogus claim . . ." We'll spare you the rest.

PolitiFact's decree is part of a larger
journalistic trend that seeks to recast all political debates as matters of
lies, misinformation and "facts," rather than differences of world view or
principles. PolitiFact wants to define for everyone else what qualifies as a
"fact," though in political debates the facts are often legitimately in
dispute.

For instance, everyone can probably agree that
Medicare's 75-year unfunded liability is somewhere around $30.8 trillion.
But that's different from a qualitative judgment, such as the wisdom of a
new health-care entitlement that was sold politically as a way to reduce
entitlement spending. But anyway, let's try to parse PolitiFact's ObamaCare
reasoning.

Evidently, it doesn't count as a government
takeover unless the means of production are confiscated. "The government
will not seize control of hospitals or nationalize doctors," the editors
write, and while "it's true that the law does significantly increase
government regulation of health insurers," they'll still be nominally
private too.

In fact—if we may use that term without
PolitiFact's seal of approval—at the heart of ObamaCare is a vast expansion
of federal control over how U.S. health care is financed, and thus
delivered. The regulations that PolitiFact waves off are designed to convert
insurers into government contractors in the business of fulfilling political
demands, with enormous implications for the future of U.S. medicine. All
citizens will be required to pay into this system, regardless of their
individual needs or preferences. Sounds like a government takeover to us.

PolitiFact is run by the St. Petersburg Times and
has marketed itself to other news organizations on the pretense of
impartiality. Like other "fact checking" enterprises, its animating conceit
is that opinions are what ideologues have, when in reality PolitiFact's
curators also have political views and values that influence their judgments
about facts and who is right in any debate.

In this case, they even claim that the government
takeover slogan "played an important role in shaping public opinion about
the health-care plan and was a significant factor in the Democrats'
shellacking in the November elections." In other words, voters turned so
strongly against Democrats because Republicans "lied," and not because of,
oh, anything the Democrats did while they were running Congress. Is that a
"fact" or a political judgment? Just asking.

As long as the press corps is nominating "lies of
the year," ours goes to the formal legislative title of ObamaCare, the
Patient Protection and Affordable Care Act. For a bill that in reality will
raise health costs and reduce patient choice, the name recalls Mary
McCarthy's famous line about every word being a lie, including "the" and
"and."

Darn! I could've become rich 50 years ago suing over the "prize" inside a box
of Cracker Jacks!
If I'd only been smart enough to move to California and hire a lawyer.

Now the prize in each box of Cracker Jacks must be taped to the business card
of a law firm.

And alongside the nutrition chart in each California fast food restaurant
must be a bulletin board for law firm business cards.

Just think of how much easier it would be for Attorney General Cuomo if
Lehman had offered an Elmo toy with the purchase of each Ropo 105 and a Barbie
Doll with each Repo 108! The jingle could've been "A Barbie date with every
108."

With an unemployment rate at the national outer
limits of 12.4%, a state budget deficit of $28 billion, and rains that would
have challenged Noah, Californians are in a glum mood this week. But that's
no reason to take it out on the kids who may be the only happy citizens left
in California. Tell that to the Center for Science in the Public Interest,
which is suing McDonald's in California in the hopes of obtaining a court
injunction banning Happy Meals. Only in California could such mindlessness
float alongside a state crisis.

The Center for Science in the Public Interest is
representing the mother of a six-year-old girl in a class-action lawsuit on
behalf of all California children under the age of eight who have been
exposed to McDonald's "inherently deceptive and unfair" marketing in the
last three years. The suit claims that McDonald's has "engaged in a highly
sophisticated scheme to use the bait of toys to exploit children's
developmental immaturity and subvert parental authority" and that arguments
over Happy Meals have caused "needless and unwarranted dissension in their
parent-child relationship." Who can doubt that tableside Happy Meals
arguments will be at the center of these kids' sessions with their shrinks
in another 10 years?

The suit arrived too late for this year's report by
the American Tort Reform Association of the nation's top "Judicial
Hellholes," in which California placed second, behind top-ranked
Philadelphia. (And for aficionados of the tort follies, remember that
lawsuit filed in Long Island, New York, by one doctor who sued his doc
partner for not yelling "Fore!" before an errant ball hit him in the eye?
The state court of appeals ruled this week that failure to yell "fore" isn't
"reckless conduct.")

The tort reform group's report lists some other
notable examples of frivolous class-action suits in California, including
one against more than a dozen olive-oil companies for fraud and deception.
Allegedly, their extra-virgin olive oil wasn't extra virgin enough to meet
USDA standards. Where were these attorneys when Madonna was singing about
similar virginal nuances?

Another suit alleged that Apple misled customers
with the claim that "reading on the iPad is just like reading a book." Au
contraire. Unlike a real book which can be left outside on a hot day, the
iPad automatically shuts down after reaching a critical temperature in order
to allow its system to cool down.

More serious was a class-action suit brought
against one of the nation's largest nursing-care providers Skilled
Healthcare Group. It alleged that some of the company's facilities sometimes
didn't provide the 3.2 nursing hours per patient per day as required by
California's health code. A Humboldt County jury demanded that the company
pay $677 million in damages. The financially strapped company settled for
$62.8 million, but not until after its stock plunged 75%. The plaintiffs bar
ended up with roughly $20 million of the haul and the patients with $26
million.

So by all means, add tort hellhole to floods,
fiscal calamity and whatever else is turning once heavenly California into
something else.

Rule 1
You assert that the Chicago Boys experiment was a "total disaster."
Rule 1 of scholarship is to back up such a bold out down with convincing
evidence that the experiment was a "total disaster."
We're still waiting for you to follow Rule 1 with hard data backing up your
claims of knowledge of the experiment and facts regarding its total disaster.

Rule 2
If an experiment is a disaster, Rule 2 calls for suggesting something concrete
to put in its place that might've been less of a disaster.
We're still waiting for you to follow Rule 2 with something concrete for Chile
since Chile has not yet reached utopian status.
Is there a non-capitalist nation that is your preferred model for lifting up the
poor without capitalism?
Is there a modern utopian society that abandoned capitalism that serves as a
model of success?
Were still waiting for some solid economic answers from you!

Rule 3
Rule 3 is to hope that an initiative to save lives and accomplish
something marvelous might succeed even if it runs counter to your academic
desires that it will fail.
Keith Olbermann, for example, violated Rule 3 in the Iraq war by hoping that the
Surge would fail so that George Bush and Dick Cheney would be humiliated in
utter defeat of the war. Olbermann hoped the Surge and that General "Betrayus"
would fail.

I have a feeling that you hope the Chicago Boys experiment in Chile is a
"total disaster" and that, as result of relying upon a Friedman experiment,
Chile will ideally fall deeper and deeper into the worst poverty in
history so that you can then call the Chicago Boys experiment really, really,
really a "total disaster."
How about a little Rule 3 hope even if it runs contrary to what you believe so
deeply about Friedman experiments never succeeding.Or do you really, really, really want the Chicago Boys
experiment to fail?
Did you also hope the Surge would fail in Iraq?

Rule 4
Rule 4 is to give credit where credit is due. When Olbermann was confronted with
evidence that the Surge far exceeded our expectations on the military front he
shirked off the military successes and focused entirely on its failure to meet
its goals perfectly on the political front. Will you find any reason to give some credit for the Chicago Boys experiment
to achieve some of its goals in Chile or will you pull an Olbermann by glossing
over the successes in order to rant about where it did not perfectly achieve its
goals.

Apples versus Geraniums
I would like to know who paid for Putnam's Italian streets, sewers, community
centers, parks, food stamps (or "ration books" in Cuba), law enforcement, fire
protection, homes, trucks, cars, water works, schools, cathedrals, art,
opera, etc? Where did the communities you admire most in Italy obtain the
resources to share so wonderfully? Two solutions come to mind. One might be the
profits from capitalism that in turn provided generous taxes to share among the
residents. The other is that the Mafia returned home with the loot (just
kidding)

When you tell us how Putman's top villages funded these things then you will
be talking more about apples than geraniums!
Can you tell us how these things were funded.

I'm a firm believer that under capitalism hope, love, and charity may have
their greatest opportunities as long a robber barons don't usurp the markets
essential for the success of capitalism. Friedman never denied that the poor
would have to receive assistance. Jagdish is correct in that Friedman proposed a
negative income tax for that purpose with internal controls to hold down
frictions of fraud, deceit, and exploitation.

Maxine Says:

Let me get this
straight . . . .

We're going to
be "gifted" with a health care
plan we are forced to purchase andfined if we don't,

Which
purportedly covers at leastten million more people,
without adding a single new doctor,
but provides for 16,000 new IRS agents,

written by a
committee whose chairman
says he doesn't understand it,

passed by
a Congress that didn't read it butexempted themselves from it,

and signed by a
President who smokes,

with funding administered
by a treasury chief whodidn't pay his taxes,

for which we'll
be taxed for four years before any
benefits take effect,

by a government
which has already bankrupted Social Security and Medicare,